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September 25, 2008

Robert Sperling
(202) 622-6500

TIGTA Releases Review of the IRS Private Debt Collection Program Procedures

The Treasury Inspector General for Tax Administration (TIGTA) today publicly released a report finding that the Internal Revenue Service (IRS) and private collection agencies (PCAs) are generally following procedures established for the Private Debt Collection Program, but the need for improvement remains.

As a result of the American Jobs Creation Act of 2004, the IRS has entered into contracts with private companies to help collect delinquent Federal taxes. Taxpayers who do not voluntarily pay their share of taxes create unfair burden on honest taxpayers and contribute to the Tax Gap, the difference between taxes that are legally owed and taxes that are paid on time, estimated at $345 billion for Tax Year 2001.

TIGTA's audit found that the IRS and contractors appropriately handled several processes. Yet, improvements can be made in areas such as PCAs difficulty in getting the taxpayer to verify their identity over the telephone, inconsistencies between the IRS and PCAs complaint assessments, and the potential for skewed taxpayer satisfaction survey results.

TIGTA recommended continued monitoring of the authentication process, use of statistically valid samples for quality reviews, and that the IRS find ways to improve the low response rate to taxpayer satisfaction surveys. In their response to the report, IRS officials agreed with the recommendations, have already taken several corrective actions, and are in the process of taking additional steps to address TIGTA's concerns.

"Since 2004, TIGTA has released seven reports regarding the Private Debt Collection Program," said J. Russell George, Inspector General, Treasury Inspector General for Tax Administration. "In general, we found no significant problems, but there continues to be challenges and questions. Due to the sensitive nature of the information the PCAs handle, continued monitoring and close coordination with the IRS is necessary."